Econ 101

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Econ 101

Postby alpha » Sat Dec 26, 1:46 am

This video is a ninety six minute interview, between Dr. Michael Hudson a classic economist who disparages amercian economics as 'junk economics'' which is the title of one of his books and a prolific writer, Pepe Escobar, who's a world trotting journalist, that writes for various non mainstream publications about world events. Even if you know nothing about economics Dr. Hudson conveys our present predicaments in layman's terms and is easy to understand. They tell us what our leader's won't and that's that all jobs have been shipped offshore for greater profits for our companies and neither america, nor England have economic systems in place to turn the proverbial clock back. We're no longer industrial based capitalism systems, as we were in the nineteenth and early twentieth centuries and the United Kingdom well before that. We've switched to a financial capitalistic system and between the meltdowns here, in 07 and the one occurring today, which is only being erroneously blamed on the pandemic, but is instead tied to the same corruption, that caused the previous debacle, when the us treasury fixed nothing, by bailing out corrupt banksters and wall street and left the taxpayers holding the bag and roughly ten million foreclosures to boot. Same thing's gonna occur again this time around, but if you watch the video above you'll have a far better understanding of today's geo political and economic policies between the three super powers, the US, China and Russia, with more that it's share of surprises.

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Re: Econ 101

Postby modern roots » Sat Dec 26, 8:05 pm

Notice how Cat and Rudy will be silent on this.

And the companies are profiting from government through subsidies.

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Re: Econ 101

Postby Rudy » Sat Dec 26, 9:20 pm

Notice how modern roots says stupid shit in his vain attempts to get reactions.

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Re: Econ 101

Postby modern roots » Sat Dec 26, 11:24 pm

You just be a good little stooge, Rudy, and go blow corporate America's cock. (and Biden's too)

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Re: Econ 101

Postby Dazzler » Sun Dec 27, 1:03 am

The US and Britain blew their last chance to save liberal capitalist democracy when they persecuted and sidelined Sanders and Corbyn. They have acted in full knowledge of what is about to happen.

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Re: Econ 101

Postby alpha » Mon Dec 28, 8:42 am

Dazzler wrote:The US and Britain blew their last chance to save liberal capitalist democracy when they persecuted and sidelined Sanders and Corbyn. They have acted in full knowledge of what is about to happen.


Sanders was always a shill for the demos, who'll continue to demo(lition) us further with neo liberalism, which is what got us into this mess. america adopted it from y'all in the late nineteenth century. Two world wars sidelined your empire and we leapfrogged you. However, Reagan expanded greatly on this neo liberalism, which in turn greatly expanded the divide between rich and poor, whilst crushing the middle class and they've been flying by the seats of their pants ever since. America exported it's industrial capitalism abroad, for even greater profits and moved us into financial capitalism, which isn't even that, since the feds are continuously adding trillions in quantitative easing, just to keep wall street propped up and profitable. america is tapping it's debt and literally adding it our gross domestic product! Both america and England have important decisions to make, our leaders are incapable of making the right ones and it'd appear you're attached like a Siamese twin? Empires can be that way, but america will drag you down too, if y'all persist on this relationship. Both of our countries have spent too much money on being offensive, since the end of wwII, whilst the other super powers focused on defense and their defensive weapons are now more than a generation ahead of ours, perhaps two? For america the fall well be the greater, because it's owned the world's reserve currency for decades, so could print all the money they wanted, whereas other countries had to stay with in their budgets and yet america's in third place militarily, if you remove the factor of nukes and M.A.D..

At one time america could've easily fed the world, but when our economy collapses from all the thieving, my cuntry will likely have to depend on the world to feed us?

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Re: Econ 101

Postby alpha » Mon Dec 28, 8:47 am

Rudy wrote:Notice how modern roots says stupid shit in his vain attempts to get reactions.


His statement wasn't the least bit stupid and was on thread. Whereas you've got nothing, except derision. Your democratic party would be so proud of you! You might've even earned a gold star?

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Re: Econ 101

Postby alpha » Mon Dec 28, 6:55 pm

"Allied with landlords and monopolists, the finance sector is extracting economic rents from the economy that’s impoverishing US government, industry and labor says Michael Hudson discussing the chokehold of pro-finance, pro-rentier capitalism reaching into the present COVID-19 crisis."

A transcript of a different interview with Michael Hudson describing america's economic problems in detail. https://theanalysis.news/interviews/pol ... r-economy/

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Re: Econ 101

Postby Rudy » Thu Dec 31, 6:00 pm

alpha wrote:"Allied with landlords and monopolists, the finance sector is extracting economic rents from the economy that’s impoverishing US government, industry and labor says Michael Hudson discussing the chokehold of pro-finance, pro-rentier capitalism reaching into the present COVID-19 crisis."

A transcript of a different interview with Michael Hudson describing america's economic problems in detail. https://theanalysis.news/interviews/pol ... r-economy/




Alpha, here's a little something by a revered economist you should look over and get a few more of other people's
insights to share with us. Please read this carefully. It has everything to do with the other people's points you are making.
Nothing esoteric here, just good common objective facts. Please pay attention to the contents of this work, or you will become confused and ultimately remorseful for your negligent inattention.



---------------------------------------------------------------------------------
Of the Division of Labour1
The greatest improvement in the productive powers of labour, and the
greater part of the skill, dexterity, and judgment with which it is any
where directed, or applied, seem to have been the effects of the division
of labour.
The effects of the division of labour, in the general business of society,
will be more easily understood, by considering in what manner it
operates in some particular manufactures. It is commonly supposed
to be carried furthest in some very trifling ones; not perhaps that it
really is carried further in them than in others of more importance:
but in those trifling manufactures which are destined to supply the small wants
of but a small number of people, the whole number of workmen must necessarily
be small; and those employed in every different branch of the work can often be
collected into the same workhouse, and placed at once under the view of the spectator.
In those great manufactures, on the contrary, which are destined to supply
the great wants of the great body of the people, every different branch of the work
employs so great a number of workmen, that it is impossible to collect them all into
the same workhouse. We can seldom see more, at one time, than those employed
in one single branch. Though in such manufactures, therefore, the work may really
be divided into a much greater number of parts, than in those of a more trifling nature,
the division is not near so obvious, and has accordingly been much less observed.
To take an example, therefore, from a very trifling manufacture; but
one in which the division of labour has been very often taken notice
of, the trade of the pin-maker; a workman not educated to this business (which the
division of labour has rendered a distinct trade), nor acquainted with the use of the
machinery employed in it (to the invention of which the same division of labour
has probably given occasion), could scarce, perhaps, with his utmost industry, make
one pin in a day, and certainly could not make twenty. But in the way in which this
business is now carried on, not only the whole work is a peculiar trade, but it is
divided into a number of branches, of which the greater part are likewise peculiar
trades. One man draws out the wire, another straights it, a third cuts it, a fourth
points it, a fifth grinds it at the top for receiving the head; to make the head requires
Original publication: Extracts from Smith, Adam, An Inquiry into the Nature and Causes of the Wealth
of Nations, ed. Edwin Cannan (Methuen, London, 1961).
Division of
labour is the
great cause of
its increased
powers,
as may be
better
understood
from a
particular
example,
such as pinmaking.
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 7
two or three distinct operations; to put it on, is a peculiar business, to whiten the
pins is another; it is even a trade by itself to put them into the paper; and the important
business of making a pin is, in this manner, divided into about eighteen distinct
operations, which, in some manufactories, are all performed by distinct hands,
though in others the same man will sometimes perform two or three of them. I have
seen a small manufactory of this kind where ten men only were employed, and where
some of them consequently performed two or three distinct operations. But though
they were very poor, and therefore but indifferently accommodated with the necessary
machinery, they could, when they exerted themselves, make among them about
twelve pounds of pins in a day. There are in a pound upwards of four thousand
pins of a middling size. Those ten persons, therefore, could make among them upwards
of forty-eight thousand pins in a day. Each person, therefore, making a tenth part
of forty-eight thousand pins, might be considered as making four thousand eight
hundred pins in a day. But if they had all wrought separately and independently,
and without any of them having been educated to this peculiar business, they certainly
could not each of them have made twenty, perhaps not one pin in a day; that
is, certainly, not the two hundred and fortieth, perhaps not the four thousand eight
hundredth part of what they are at present capable of performing, in consequence
of a proper division and combination of their different operations.
In every other art and manufacture, the effects of the division of labour
are similar to what they are in this very trifling one; though, in many
of them, the labour can neither be so much subdivided, nor reduced
to so great a simplicity of operation. The division of labour, however,
so far as it can be introduced, occasions, in every art, a proportionable
increase of the productive powers of labour. The separation of different trades
and employments from one another, seems to have taken place, in consequence of
this advantage. This separation too is generally carried furthest in those countries
which enjoy the highest degree of industry and improvement; what is the work of
one man in a rude state of society, being generally that of several in an improved
one. In every improved society, the farmer is generally nothing but a farmer; the
manufacturer, nothing but a manufacturer. The labour too which is necessary to
produce any one complete manufacture, is almost always divided among a great number
of hands. How many different trades are employed in each branch of the linen and
woollen manufactures, from the growers of the flax and the wool, to the bleachers
and smoothers of the linen, or to the dyers and dressers of the cloth! The nature of
agriculture, indeed, does not admit of so many subdivisions of labour, nor of so complete
a separation of one business from another, as manufactures. It is impossible
to separate so entirely, the business of the grazier from that of the corn-farmer,
as the trade of the carpenter is commonly separated from that of the smith. The
spinner is almost always a distinct person from the weaver; but the ploughman,
the harrower, the sower of the seed, and the reaper of the corn, are often the same.
The occasions for those different sorts of labour returning with the different seasons
of the year, it is impossible that one man should be constantly employed in any one
of them. This impossibility of making so complete and entire a separation of all the
different branches of labour employed in agriculture, is perhaps the reason why the
improvement of the productive powers of labour in this art, does not always keep
pace with their improvement in manufactures. The most opulent nations, indeed,
The effect is
similar in all
trades and
also in the
division of
employments.
8 ADAM SMITH
generally excel all their neighbours in agriculture as well as in manufactures; but
they are commonly more distinguished by their superiority in the latter than in the
former. Their lands are in general better cultivated, and having more labour and
expence bestowed upon them, produce more in proportion to the extent and natural
fertility of the ground. But this superiority of produce is seldom much more than
in proportion to the superiority of labour and expence. In agriculture, the labour of
the rich country is not always much more productive than that of the poor; or, at
least, it is never so much more productive, as it commonly is in manufactures. The
corn of the rich country, therefore, will not always, in the same degree of goodness,
come cheaper to market than that of the poor. The corn of Poland, in the same degree
of goodness, is as cheap as that of France, notwithstanding the superior opulence
and improvement of the latter country. The corn of France is, in the corn provinces,
fully as good, and in most years nearly about the same price with the corn of England,
though, in opulence and improvement, France is perhaps inferior to England. The
corn-lands of England, however, are better cultivated than those of France, and the
corn-lands of France are said to be much better cultivated than those of Poland. But
though the poor country, notwithstanding the inferiority of its cultivation, can, in
some measure, rival the rich in the cheapness and goodness of its corn, it can pretend
to no such competition in its manufactures; at least if those manufactures suit
the soil, climate, and situation of the rich country. The silks of France are better
and cheaper than those of England, because the silk manufacture, at least under
the present high duties upon the importation of raw silk, does not so well suit the
climate of England as that of France. But the hard-ware and the coarse woollens of
England are beyond all comparison superior to those of France, and much cheaper
too in the same degree of goodness. In Poland there are said to be scarce any manufactures
of any kind, a few of those coarser household manufactures excepted,
without which no country can well subsist.
This great increase of the quantity of work which, in consequence of
the division of labour, the same number of people are capable of performing,
is owing to three different circumstances; first to the increase
of dexterity in every particular workman; secondly, to the saving of the time which
is commonly lost in passing from one species of work to another; and lastly, to the
invention of a great number of machines which facilitate and abridge labour, and
enable one man to do the work of many.
First, the improvement of the dexterity of the workman necessarily
increases the quantity of the work he can perform; and the division
of labour, by reducing every man’s business to some one simple operation, and by
making this operation the sole employment of his life, necessarily increases very much
the dexterity of the workman. A common smith, who, though accustomed to handle
the hammer, has never been used to make nails, if upon some particular occasion
he is obliged to attempt it, will scarce, I am assured, be able to make above two or
three hundred nails in a day, and those too very bad ones. A smith who has been
accustomed to make nails, but whose sole or principal business has not been that
of a nailer, can seldom with his utmost diligence make more than eight hundred or
a thousand nails in a day. I have seen several boys under twenty years of age who
had never exercised any other trade but that of making nails, and who, when they
exerted themselves, could make, each of them, upwards of two thousand three
The advantage
is due to three
circumstances,
(1) improved
dexterity,
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 9
hundred nails in a day. The making of a nail, however, is by no means one of the
simplest operations. The same person blows the bellows, stirs or mends the fire as
there is occasion, heats the iron, and forges every part of the nail: In forging the
head too he is obliged to change his tools. The different operations into which the
making of a pin, or of a metal button, is subdivided, are all of them much more
simple, and the dexterity of the person, of whose life it has been the sole business
to perform them, is usually much greater. The rapidity with which some of the
operations of those manufactures are performed, exceeds what the human hand could,
by those who had never seen them, be supposed capable of acquiring.
Secondly, the advantage which is gained by saving the time commonly
lost in passing from one sort of work to another, is much greater
than we should at first view be apt to imagine it. It is impossible to pass very quickly
from one kind of work to another; that is carried on in a different place, and with quite
different tools. A country weaver, who cultivates a small farm, must lose a good deal
of time in passing from his loom to the field, and from the field to his loom. When
the two trades can be carried on in the same workhouse, the loss of time is no doubt
much less. It is even in this case, however, very considerable. A man commonly saunters
a little in turning his hand from one sort of employment to another. When he
first begins the new work he is seldom very keen and hearty; his mind, as they say,
does not go to it, and for some time he rather trifles than applies to good purpose.
The habit of sauntering and of indolent careless application, which is naturally, or
rather necessarily acquired by every country workman who is obliged to change his
work and his tools every half hour, and to apply his hand in twenty different ways
almost every day of his life; renders him almost always slothful and lazy, and incapable
of any vigorous application even on the most pressing occasions. Independent,
therefore, of his deficiency in point of dexterity, this cause alone must always reduce
considerably the quantity of work which he is capable of performing.
Thirdly, and lastly, every body must be sensible how much labour
is facilitated and abridged by the application of proper machinery. It
is unnecessary to give any example. I shall only observe, therefore, that
the invention of all those machines by which labour is so much facilitated
and abridged, seems to have been originally owing to the division of labour.
Men are much more likely to discover easier and readier methods of attaining any
object, when the whole attention of their minds is directed towards that single object,
than when it is dissipated among a great variety of things. But in consequence of
the division of labour, the whole of every man’s attention comes naturally to be directed
towards some one very simple object. It is naturally to be expected, therefore, that
some one or other of those who are employed in each particular branch of labour
should soon find out easier and readier methods of performing their own particular
work, wherever the nature of it admits of such improvement. A great part of the
machines made use of in those manufactures in which labour is most subdivided,
were originally the inventions of common workmen, who, being each of them
employed in some very simple operation, naturally turned their thoughts towards
finding out easier and readier methods of performing it. Whoever has been much
accustomed to visit such manufactures, must frequently have been shewn very
pretty machines, which were the inventions of such workmen, in order to facilitate
and quicken their own particular part of the work. In the first fire-engines, a boy
(2) saving of
time,
and (3)
application
of machinery,
invented by
workmen,
10 ADAM SMITH
was constantly employed to open and shut alternately the communication between
the boiler and the cylinder, according as the piston either ascended or descended.
One of those boys, who loved to play with his companions, observed that, by trying
a string from the handle of the valve which opened this communication to another
part of the machine, the valve would open and shut without his assistance, and leave
him at liberty to divert himself with his playfellows. One of the greatest improvements
that has been made upon this machine, since it was first invented, was in this
manner the discovery of a boy who wanted to save his own labour.
All the improvements in machinery, however, have by no means been
the inventions of those who had occasion to use the machines. Many
improvements have been made by the ingenuity of the makers of the
machines, when to make them became the business of a peculiar
trade; and some by that of those who are called philosophers or men of speculation,
whose trade it is not to do any thing, but to observe every thing; and who,
upon that account, are often capable of combining together the powers of the most
distant and dissimilar objects. In the progress of society, philosophy or speculation
becomes, like every other employment, the principal or sole trade and occupation
of a particular class of citizens. Like every other employment too, it is subdivided
into a great number of different branches, each of which affords occupation to a
peculiar tribe or class of philosophers; and this subdivision of employment in philosophy,
as well as in every other business, improves dexterity, and saves time. Each
individual becomes more expert in his own peculiar branch, more work is done upon
the whole, and the quantity of science is considerably increased by it.
It is the great multiplication of the productions of all the different
arts, in consequence of the division of labour, which occasions, in a
well-governed society, that universal opulence which extends itself to
the lowest ranks of the people. Every workman has a great quantity
of his own work to dispose of beyond what he himself has occasion for; and every
other workman being exactly in the same situation, he is enabled to exchange a
great quantity of his own goods for a great quantity, or, what comes to the same
thing, for the price of a great quantity of theirs. He supplies them abundantly with
what they have occasion for, and they accommodate him as amply with what he
has occasion for, and a general plenty diffuses itself through all the different ranks
of the society.
Observe the accommodation of the most common artificer or
day-labourer in a civilized and thriving country, and you will perceive
that the number of people of whose industry a part, though but a small
part, has been employed in procuring him this accommodation, exceeds
all computation. The woollen coat, for example, which covers
the day-labourer, as coarse and rough as it may appear, is the produce
of the joint labour of a great multitude of workmen. The shepherd, the sorter
of the wool, the wool-comber or carder, the dyer, the scribbler, the spinner, the weaver,
the fuller, the dresser, with many others, must all join their different arts in order to
complete even this homely production. How many merchants and carriers, besides,
must have been employed in transporting the materials from some of those workmen
to others who often live in a very distant part of the country! how much commerce
and navigation in particular, how many ship-builders, sailors, sail-makers,
even the daylabourer’s
coat being
the produce
of a vast
number of
workmen.
or by
machinemakers
and
philosophers.
Hence the
universal
opulence of a
well-governed
society,
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 11
rope-makers, must have been employed in order to bring together the different drugs
made use of by the dyer, which often come from the remotest corners of the world!
What a variety of labour too is necessary in order to produce the tools of the meanest
of those workmen! To say nothing of such complicated machines as the ship of
the sailor, the mill of the fuller, or even the loom of the weaver, let us consider only
what a variety of labour is requisite in order to form that very simple machine, the
shears with which the shepherd clips the wool. The miner, the builder of the furnace
for smelting the ore, the feller of the timber, the burner of the charcoal to be
made use of in the smelting-house, the brick-maker, the brick-layer, the workmen
who attend the furnace, the mill-wright, the forger, the smith, must all of them join
their different arts in order to produce them. Were we to examine, in the same
manner, all the different parts of his dress and household furniture, the coarse linen
shirt which he wears next his skin, the shoes which cover his feet, the bed which he
lies on, and all the different parts which compose it, the kitchen-grate at which he
prepares his victuals, the coals which he makes use of for that purpose, dug from
the bowels of the earth, and brought to him perhaps by a long sea and a long land
carriage, all the other utensils of his kitchen, all the furniture of his table, the knives
and forks, the earthen or pewter plates upon which he serves up and divides his
victuals, the different hands employed in preparing his bread and his beer, the glass
window which lets in the heat and the light, and keeps out the wind and the rain,
with all the knowledge and art requisite for preparing that beautiful and happy invention,
without which these northern parts of the world could scarce have afforded a
very comfortable habitation, together with the tools of all the different workmen
employed in producing those different conveniencies; if we examine, I say, all these
things, and consider what a variety of labour is employed about each of them, we
shall be sensible that without the assistance and co-operation of many thousands,
the very meanest person in a civilized country could not be provided, even according
to what we very falsely imagine, the easy and simple manner in which he is commonly
accommodated. Compared, indeed, with the more extravagant luxury of the
great, his accommodation must no doubt appear extremely simple and easy; and yet
it may be true, perhaps, that the accommodation of an European prince does not
always so much exceed that of an industrious and frugal peasant, as the accommodation
of the latter exceeds that of many an African king, the absolute master of
the lives and liberties of ten thousand naked savages.
Of the Principle which Gives Occasion to the Division of Labour
This division of labour, from which so many advantages are derived,
is not originally the effect of any human wisdom, which foresees and
intends that general opulence to which it gives occasion. It is the necessary,
though very slow and gradual, consequence of a certain propensity
in human nature which has in view no such extensive utility;
the propensity to truck, barter, and exchange one thing for another.
Whether this propensity be one of those original principles in
human nature, of which no further account can be given; or whether,
as seems more probable, it be the necessary consequence of the faculties
of reason and speech, it belongs not to our present subject to
The division
of labour
arises from a
propensity
in human
nature to
exchange.
This
propensity is
found in man
alone.
12 ADAM SMITH
enquire. It is common to all men, and to be found in no other race of animals, which
seem to know neither this nor any other species of contracts. Two greyhounds, in
running down the same hare, have sometimes the appearance of acting in some sort
of concert. Each turns her towards his companion, or endeavours to intercept her
when his companion turns her towards himself. This, however, is not the effect of
any contract, but of the accidental concurrence of their passions in the same object
at that particular time. Nobody ever saw a dog make a fair and deliberate exchange
of one bone for another with another dog. Nobody ever saw one animal by its gestures
and natural cries signify to another, this is mine, that yours; I am willing to
give this for that. When an animal wants to obtain something either of a man or of
another animal, it has no other means of persuasion but to gain the favour of those
whose service it requires. A puppy fawns upon its dam, and a spaniel endeavours
by a thousand attractions to engage the attention of its master who is at dinner,
when it wants to be fed by him. Man sometimes uses the same arts with his
brethren, and when he has no other means of engaging them to act according to his
inclinations, endeavours by every servile and fawning attention to obtain their good
will. He has not time, however, to do this upon every occasion. In civilized society
he stands at all times in need of the co-operation and assistance of great multitudes,
while his whole life is scarce sufficient to gain the friendship of a few persons. In
almost every other race of animals each individual, when it is grown up to maturity,
is entirely independent, and in its natural state has occasion for the assistance
of no other living creature. But man has almost constant occasion for the help of
his brethren, and it is in vain for him to expect it from their benevolence only. He
will be more likely to prevail if he can interest their self-love in his favour, and show
them that it is for their own advantage to do for him what he requires of them.
Whoever offers to another a bargain of any kind, proposes to do this. Give me that
which I want, and you shall have this which you want, is the meaning of every such
offer; and it is in this manner that we obtain from one another the far greater part
of those good offices which we stand in need of. It is not from the benevolence of
the butcher, the brewer, or the baker, that we expect our dinner, but from their regard
to their own interest. We address ourselves, not to their humanity but to their selflove,
and never talk to them of our own necessities but of their advantages. Nobody
but a beggar chuses to depend chiefly upon the benevolence of his fellow-citizens.
Even a beggar does not depend upon it entirely. The charity of well-disposed people,
indeed, supplies him with the whole fund of his subsistence. But though this
principle ultimately provides him with all the necessaries of life which he has occasion
for, it neither does nor can provide him with them as he has occasion for them.
The greater part of his occasional wants are supplied in the same manner as those
of other people, by treaty, by barter, and by purchase. With the money which one
man gives him he purchases food. The old cloaths which another bestows upon
him he exchanges for other old cloaths which suit him better, or for lodging, or for
food, or for money, with which he can buy either food, cloaths, or lodging, as he
has occasion.
As it is by treaty, by barter, and by purchase, that we obtain from
one another the greater part of those mutual good offices which we
stand in need of, so it is this same trucking disposition which originally
gives occasion to the division of labour. In a tribe of hunters or
It is encouraged
by self-interest
and leads to
division of
labour,
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 13
shepherds a particular person makes bows and arrows, for example, with more readiness
and dexterity than any other. He frequently exchanges them for cattle or for venison
with his companions; and he finds at last that he can in this manner get more
cattle and venison, than if he himself went to the field to catch them. From a regard
to his own interest, therefore, the making of bows and arrows grows to be his chief
business, and he becomes a sort of armourer. Another excels in making the frames
and covers of their little huts or moveable houses. He is accustomed to be of use in
this way to his neighbours, who reward him in the same manner with cattle and
with venison, till at last he finds it his interest to dedicate himself entirely to this
employment, and to become a sort of house-carpenter. In the same manner a third
becomes a smith or a brazier; a fourth a tanner or dresser of hides or skins, the principal
part of the clothing of savages. And thus the certainty of being able to exchange
all that surplus part of the produce of his own labour, which is over and above
his own consumption, for such parts of the produce of other men’s labour as he
may have occasion for, encourages every man to apply himself to a particular
occupation, and to cultivate and bring to perfection whatever talent or genius he
may possess for that particular species of business.
The difference of natural talents in different men is, in reality, much
less than we are aware of; and the very different genius which appears
to distinguish men of different professions, when grown up to maturity,
is not upon many occasions so much the cause, as the effect of
the division of labour. The difference between the most dissimilar
characters, between a philosopher and a common street porter, for
example, seems to arise not so much from nature, as from habit, custom,
and education. When they came into the world, and for the first six or eight
years of their existence, they were perhaps, very much alike, and neither their parents
nor playfellows could perceive any remarkable difference. About that age, or
soon after, they come to be employed in very different occupations. The difference
of talents comes then to be taken notice of, and widens by degrees, till at last the
vanity of the philosopher is willing to acknowledge scarce any resemblance. But without
the disposition to truck, barter, and exchange, every man must have procured
to himself every necessary and conveniency of life which he wanted. All must have
had the same duties to perform, and the same work to do, and there could have
been no such difference of employment as could alone give occasion to any great
difference of talents.
As it is this disposition which forms that difference of talents, so
remarkable among men of different professions, so it is this same disposition
which renders that difference useful. Many tribes of animals
acknowledged to be all of the same species, derive from nature a much
more remarkable distinction of genius, than what, antecedent to custom and education,
appears to take place among men. By nature a philosopher is not in genius and
disposition half so different from a street porter, as a mastiff is from a greyhound,
or a greyhound from a spaniel, or this last from a shepherd’s dog. Those different
tribes of animals, however, though all of the same species, are of scarce any use to
one another. The strength of the mastiff is not in the least supported either by the
swiftness of the greyhound, or by the sagacity of the spaniel, or by the docility of
the shepherd’s dog. The effects of those different geniuses and talents, for want of
thus giving
rise to
differences of
talent more
important
than the
natural
differences,
and rendering
those
differences
useful.
14 ADAM SMITH
the power or disposition to barter and exchange, cannot be brought into a common
stock, and do not in the least contribute to the better accommodation and conveniency
of the species. Each animal is still obliged to support and defend itself,
separately and independently, and derives no sort of advantage from that variety of
talents with which nature has distinguished its fellows. Among men, on the contrary,
the most dissimilar geniuses are of use to one another; the different produces
of their respective talents, by the general disposition to truck, barter, and exchange,
being brought, as it were, into a common stock, where every man may purchase
whatever part of the produce of other men’s talents he has occasion for.
Of the Natural and Market Price of Commodities
There is in every society or neighbourhood an ordinary or average rate
both of wages and profit in every different employment of labour and
stock. This rate is naturally regulated, as I shall show hereafter, partly
by the general circumstances of the society, their riches or poverty, their
advancing, stationary, or declining condition; and partly by the particular nature of
each employment.
There is likewise in every society or neighbourhood an ordinary or
average rate of rent, which is regulated too, as I shall show hereafter, partly by the
general circumstances of the society or neighbourhood in which the land is situated,
and partly by the natural or improved fertility of the land.
These ordinary or average rates may be called the natural rates of wages,
profit, and rent, at the time and place in which they commonly prevail.
When the price of any commodity is neither more nor less than what
is sufficient to pay the rent of the land, the wages of the labour, and
the profits of the stock employed in raising, preparing, and bringing it
to market, according to their natural rates, the commodity is then sold
for what may be called its natural price.
The commodity is then sold precisely for what it is worth, or for
what it really costs the person who brings it to market; for though in
common language what is called the prime cost of any commodity does
not comprehend the profit of the person who is to sell it again, yet if
he sells it at a price which does not allow him the ordinary rate of profit in his
neighbourhood, he is evidently a loser by the trade; since by employing his stock in
some other way he might have made that profit. His profit, besides, is his revenue,
the proper fund of his subsistence. As, while he is preparing and bringing the goods
to market, he advances to his workmen their wages, or their subsistence; so he advances
to himself, in the same manner, his own subsistence, which is generally suitable to
the profit which he may reasonably expect from the sale of his goods. Unless they
yield him this profit, therefore, they do not repay him what they may very properly
be said to have really cost him.
Though the price, therefore, which leaves him this profit, is not always
the lowest at which a dealer may sometimes sell his goods, it is the
lowest at which he is likely to sell them for any considerable time; at
least where there is perfect liberty, or where he may change his trade
as often as he pleases.
Ordinary or
average rates
of wages,
profit,
and rent
may be called
natural rates,
to pay which
a commodity
is sold at its
natural price,
or for what it
really costs,
which
includes
profit,
since no one
will go on
selling
without
profit.
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 15
The actual price at which any commodity is commonly sold is called
its market price. It may either be above, or below, or exactly the same with its
natural price.
The market price of every particular commodity is regulated by the
proportion between the quantity which is actually brought to market,
and the demand of those who are willing to pay the natural price of
the commodity, or the whole value of the rent, labour, and profit, which
must be paid in order to bring it thither. Such people may be called
the effectual demanders, and their demand the effectual demand;
since it may be sufficient to effectuate the bringing of the commodity to market. It
is different from the absolute demand. A very poor man may be said in some sense
to have a demand for a coach and six; he might like to have it; but his demand is
not an effectual demand, as the commodity can never be brought to market in order
to satisfy it.
When the quantity of any commodity which is brought to market
falls short of the effectual demand, all those who are willing to pay
the whole value of the rent, wages, and profit, which must be paid in
order to bring it thither, cannot be supplied with the quantity which
they want. Rather than want it altogether, some of them will be willing
to give more. A competition will immediately begin among them,
and the market price will rise more or less above the natural price,
according as either the greatness of the deficiency, or the wealth and wanton luxury
of the competitors, happen to animate more or less the eagerness of the competition.
Among competitors of equal wealth and luxury the same deficiency will
generally occasion a more or less eager competition, according as the acquisition of
the commodity happens to be of more or less importance to them. Hence the exorbitant
price of the necessaries of life during the blockade of a town or in a famine.
When the quantity brought to market exceeds the effectual
demand, it cannot be all sold to those who are willing to pay the whole
value of the rent, wages and profit, which must be paid in order to
bring it thither. Some part must be sold to those who are willing to
pay less, and the low price which they give for it must reduce the price
of the whole. The market price will sink more or less below the natural
price, according as the greatness of the excess increases more or less the competition
of the sellers, or according as it happens to be more or less important to
them to get immediately rid of the commodity. The same excess in the importation
of perishable, will occasion a much greater competition than in that of durable commodities;
in the importation of oranges, for example, than in that of old iron.
When the quantity brought to market is just sufficient to supply the
effectual demand and no more, the market price naturally comes to
be either exactly, or as nearly as can be judged of, the same with the
natural price. The whole quantity upon hand can be disposed of for
this price, and cannot be disposed of for more. The competition of the
different dealers obliges them all to accept of this price, but does not
oblige them to accept of less.
The quantity of every commodity brought to market naturally suits
itself to the effectual demand. It is the interest of all those who
Market price
When the
quantity
brought falls
short of the
effectual
demand, the
market price
rises above
the natural;
is regulated
by the
quantity
brought to
market and
the effectual
demand.
when it
exceeds the
effectual
demand the
market price
falls below
the natural;
when it is
just equal to
the effectual
demand the
market and
natural price
coincide.
It naturally
suits itself to
the effectual
demand.
16 ADAM SMITH
employ their land, labour, or stock, in bringing any commodity to market, that the
quantity never should exceed the effectual demand; and it is the interest of all other
people that it never should fall short of that demand.
If at any time it exceeds the effectual demand, some of the component
parts of its price must be paid below their natural rate. If it is
rent, the interest of the landlords will immediately prompt them to withdraw
a part of their land; and if it is wages or profit, the interest of
the labourers in the one case, and of their employers in the other, will
prompt them to withdraw a part of their labour or stock from this
employment. The quantity brought to market will soon be no more
than sufficient to supply the effectual demand. All the different parts of its price will
rise to their natural rate, and the whole price to its natural price.
If, on the contrary, the quantity brought to market should at any
time fall short of the effectual demand, some of the component parts
of its price must rise above their natural rate. If it is rent, the interest
of all other landlords will naturally prompt them to prepare more land
for the raising of this commodity; if it is wages or profit, the interest
of all other labourers and dealers will soon prompt them to employ
more labour and stock in preparing and bringing it to market. The quantity brought
thither will soon be sufficient to supply the effectual demand. All the different parts
of its price will soon sink to their natural rate, and the whole price to its natural
price.
The natural price, therefore, is, as it were, the central price, to which
the prices of all commodities are continually gravitating. Different accidents
may sometimes keep them suspended a good deal above it, and
sometimes force them down even somewhat below it. But whatever
may be the obstacles which hinder them from settling in this center of
repose and continuance, they are constantly tending towards it.
Note
1 This phrase, if used at all before this time, was not a familiar one. Its presence here is
probably due to a passage in Mandeville, Fable of the Bees, pt. ii. (1729), dial. vi., p. 335:
“Cleo. . . . When once men come to be governed by written laws, all the rest comes on
apace . . . No number of men, when once they enjoy quiet, and no man needs to fear his
neighbour, will be long without learning to divide and subdivide their labour. Hor. I don’t
understand you. Cleo. Man, as I have hinted before, naturally loves to imitate what he
sees others do, which is the reason that savage people all do the same thing: this hinders
them from meliorating their condition, though they are always wishing for it: but if one
will wholly apply himself to the making of bows and arrows, whilst another provides food,
a third builds huts, a fourth makes garments, and a fifth utensils, they not only become
useful to one another, but the callings and employments themselves will, in the same number
of years, receive much greater improvements, than if all had been promiscuously followed
by every one of the five. Hor. I believe you are perfectly right there; and the truth
of what you say is in nothing so conspicuous as it is in watch-making, which is come to
a higher degree of perfection than it would have been arrived at yet, if the whole had
always remained the employment of one person; and I am persuaded that even the plenty
we have of clocks and watches, as well as the exactness and beauty they may be made of,
When it
exceeds that
demand,
some of the
component
parts of its
price are
below their
natural rate;
when it falls
short, some
of the
component
parts are
above their
natural rate.
Natural price
is the central
price to
which actual
prices
gravitate.
INQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 17
are chiefly owing to the division that has been made of that art into many branches.” The
index contains, “Labour, The usefulness of dividing and subdividing it”. Joseph Harris,
Essay upon Money and Coins, 1757, pt. i., § 12, treats of the “usefulness of distinct trades,”
or “the advantages accruing to mankind from their betaking themselves severally to different
occupations,” but does not use the phrase “division of labour

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Rudy
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Re: Econ 101

Postby Rudy » Thu Dec 31, 6:02 pm

I've got a few other things you should see in addition to this marvelous explanation.

Let me know when you are ready.

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Re: Econ 101

Postby alpha » Thu Dec 31, 11:54 pm

Rudy wrote:I've got a few other things you should see in addition to this marvelous explanation.

Let me know when you are ready.


Adam Smith is a good choice Rudy, because he was a classical economist. However, america's economics aren't based on his, nor any other classical economist. Do you know why? Do you understand what was so drastically changed from classical economics, to what's been created today? It's clearly spelled out in your dissertation above, can you find it?

Our colleges are teaching economics wrongly and churning out students who've never realized their education in economics is so fundamentally flawed. The vast majority of them never learn their mistake(s) their entire lives, according to Steven Keen, who's also an economist. I personally never took an economics course in my life, Rudy and apparently i know something about the subject that the vast majority of american educated one's don't. I wish my business graduate dad was still alive, so i could've debated a vast wealth of info i've learned, since he departed, but that will never be. Nor is it likely it will ever occur here, either, but at least not without giving it the old college try, eh?

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Re: Econ 101

Postby Rudy » Fri Jan 01, 6:14 pm

alpha wrote:
Rudy wrote:I've got a few other things you should see in addition to this marvelous explanation.

Let me know when you are ready.


Adam Smith is a good choice Rudy, because he was a classical economist. However, america's economics aren't based on his, nor any other classical economist. Do you know why? Do you understand what was so drastically changed from classical economics, to what's been created today? It's clearly spelled out in your dissertation above, can you find it?

Our colleges are teaching economics wrongly and churning out students who've never realized their education in economics is so fundamentally flawed. The vast majority of them never learn their mistake(s) their entire lives, according to Steven Keen, who's also an economist. I personally never took an economics course in my life, Rudy and apparently i know something about the subject that the vast majority of american educated one's don't. I wish my business graduate dad was still alive, so i could've debated a vast wealth of info i've learned, since he departed, but that will never be. Nor is it likely it will ever occur here, either, but at least not without giving it the old college try, eh?


Many absolute gems come from the quiet Scottish professor here, alpha, yes.
Probably one of his most prescient offerings is that "no society can be flourishing and happy, of which, by far, the greater part of the numbers are poor and miserable". Rings that liberty bell quite a little yes?

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Re: Econ 101

Postby alpha » Sat Jan 02, 8:26 am

Rudy wrote:
alpha wrote:
Rudy wrote:I've got a few other things you should see in addition to this marvelous explanation.

Let me know when you are ready.


Adam Smith is a good choice Rudy, because he was a classical economist. However, america's economics aren't based on his, nor any other classical economist. Do you know why? Do you understand what was so drastically changed from classical economics, to what's been created today? It's clearly spelled out in your dissertation above, can you find it?

Our colleges are teaching economics wrongly and churning out students who've never realized their education in economics is so fundamentally flawed. The vast majority of them never learn their mistake(s) their entire lives, according to Steven Keen, who's also an economist. I personally never took an economics course in my life, Rudy and apparently i know something about the subject that the vast majority of american educated one's don't. I wish my business graduate dad was still alive, so i could've debated a vast wealth of info i've learned, since he departed, but that will never be. Nor is it likely it will ever occur here, either, but at least not without giving it the old college try, eh?


Many absolute gems come from the quiet Scottish professor here, alpha, yes.
Probably one of his most prescient offerings is that "no society can be flourishing and happy, of which, by far, the greater part of the numbers are poor and miserable". Rings that liberty bell quite a little yes?


I do agree, Rudy. Perhaps this is why our own liberty bell in philadelphia hasn't rung at all in quite awhile? Steve Keen is a verbal dynamo in this twenty seven minute interview Lies, Damn Lies and Climate Statistics, where he states the fundamental flaw in american economics, which if continued will only lead to catastrophic and irreversible climate change.
Steve Keen is calmer in this interview called Capitalism, Closed For Business, also twenty seven minutes long, should you find the time they are both entertaining, altho i had to watch the first a couple of times to encapsulate and fully appreciate everything being said.


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